I'm late jumping in a bit late here, but I think Mike Gunter is right and its NEF all the way. My Leica has DNG files, which I convert to JPEGs at least the images I care about and process. NEF files will be around a lot longer than DNG files. There are many more programs that cater towards NEF files than DNGs now and I believe in the future. I know a lot of people hate on Ken rockwell, but he wrote about this to a certain extent on his updates page this week.

True archival blu-ray discs will easily outlast archival tapes (the kind used in data centers). However, neither are practical backup or archival solution for individual users A set of professional archival-grade blu-ray discs will cost hundreds of dollars**. High quality tape drives cost thousands of dollars.

For most users, a good solution is to get a couple external storage systems ("toasters", Drobo, etc.) and rotate them off-site. Buy new drives every few years to "refresh" the system and you're set.

** I'm aware there are some relatively inexpensive "archival blu-ray" dics supposedly rated at 200 years. I'm skeptical of this claim, as the dics don't appear to have been independently tested by a qualified laboratory.

You find lots of discussios on backup media, in various technical forums forums
The general conscious seems to be, Blue ray or any disk for that matter, is not as reliable as tape
Tape has the advantage of being around along time so it is tried and tested
At the end of the day entropy will get you

I usually shoot NEF+JPEG(Fine). I archive my original photos on an external backup drive straight from the memory card, JPEGs as JPEGs, NEFs as NEFs. I import the NEFs into LR3 on my internal hard drive as DNGs in order to work on them. If I were to lose my main drive, I can recover the originals I had saved on my external drive. The originals and processed photos I consider the most dear to me, the ones I'd really hate to lose, get written to 50GB blu-ray discs for storage off-site, the JPEG and NEF originals as JPEGs and NEFs, the processed DNGs as DNGs and sometimes also as LR-exported high quality JPEGs. Massive hard drives and blu-ray discs are cheap these days. It's not that expensive to keep backup copies of photos in their original formats and to work with them in another format if you choose to.

For individual users, staying with NEF is almost always the best answer.

DNG is useful for those processing raw files from many different camera manufacturers and want to have a consistent workflow. Stock agencies and image retouchers for example, may benefit from having a DNG-based workflow. Many archival houses (including corporate & government archives) are also DNG users. And of course some cameras & digital backs these days use DNG natively (or has DNG as an option, in the case of Pentax).

Some other points:

- For pure archival purposes, a DNG can "embed" the original RAW file. I.e., the resulting DNG file will contain image data in DNG format, as well as the original NEF format. This obviously results in large DNG files (nominally twice as large as the original NEF) but provides the maximum flexibility. I know at least one large stock agency that does this archival conversion for every submission.

- The conversion from NEF to DNG is lossless. The image quality is not reduced at all, which is different from a traditional negative transfer.

- Non-RAW images (such as JPEGs) can also be converted to DNG, for consistent workflow. The resulting DNG can also then be processed non-destructively without loss of quality (unlike re-processing JPEGs).

- Some of the posts imply that DNG is a proprietary Adobe format; it is not. The DNG specification is based on TIFF/EP and is considered an "open" format.

On sidecar vs. NEF modifications: it used to be if you work with Adobe tools, you use sidecars, because that's what Adobe tools were designed to use. Nowadays tools are more interoperable with each other.

Personally, I still don't like to ever modify the NEFs. I treat them as immutable. All changes either go to a sidecar (e.g., in Bridge) or to a database (e.g., in Aperture or Lightroom). The NEFs are backed up, archived, and never modified. I don't convert to DNG.

That's it then NEF is my format from now on, I have my photo files on a separate HD, (nothing else on the drive) and this is all on another as backup. I will certainly change the backup data location, also.

For me, the NEF file is treated as the "Negative" film, that I keep. The result of post-processing is like working on a Darkroom from the film days..

Now, the transformation of a NEF into a DNG is like translating your film negative into a different form of negative... and you may only loose in doing this.

Take in mind that the DNG is a file format designed by Adobe in order to make easier their work (due to the diversity of RAW formats they need to deal), and I will be not surprised if they took the minimum-common-denominator among the formats.

Some RAW formats contain more information than the one stored in the DNG file, while others even make the work more difficult (like some NEF files that use encryption for storing the Camera custom curves).

If you mainly work with Nikon equipment, I would certainly keep the NEF files and do not translate them into a different obscure format :)

I think, keeping the side car will slow down saving your edits
if you are worried about the data base being corrupted or lost, (and you should be) make sure you change, the backup data location, to a separate hard drive , in LR3 the default, is the same location as the main data base . If you keep an off site backup of your image files, also keep an off site copy of the data base

if you change to DNG and or lose the sidecar, I think, you would not be abel to use the full potential of Nikon capture NX2 at a later date ( no idea why you might want to do this)

If you stick with NEF, do save your edits to a sidecar file. That way, if your library database ever becomes corrupt (nightmare!) you would be able to reimport all your images with whatever edits you had done to them. You might never need the sidecar, but if you ever do you'll be glad you have it. Welcome to the forum, gnarly.

Again Thank You to all for your insight, I am glad that I have joined this Forum, so much great information.
An added part to the question if I may, what are peoples thoughts on that addition of the xmp. (Sidecar file), or is this just another step, as if I understand correctly, in Lightroom you can use the "Save Metadata to file" to get that info if it is needed.

I leave stuff in NEF and Lightroom with Nik add on will convert my edits to Tiff files. I particularly don't like the size but Tiffs are the most universal of the three and I'm not given a choice. I figure doing un-nessary conversions is a waste of time and could result in bad images. I just leave it as I shot it until I need to edit.

At the end of the day, I'm not sure if it makes much difference as long as it is a raw (lossless) file.

I have been doing some reading online and in books and there seems to be some controversy as to which format one should save RAW files to.
I understand the general thoughts, open source,
many software products support DNG,
tyranny of the manufacturer's proprietary formats
smaller file size.
Some Nikon NEF files will grow in size
Increase workflow for Nikon cameras
The list goes on.
I was wondering what others have to say on this topic, as I have been converting to DNG, however now with what I am reading I am not so sure I should be going to DNG, but rather stay with the original Camera format.